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Global Manufacturing Is Slowly Expanding, But Employment Is Now On The Decline

Sam Ro,Joe Weisenthal   

Global Manufacturing Is Slowly Expanding, But Employment Is Now On The Decline

global pmi

JP Morgan, Markit

The world's biggest economies have published their June manufacturing PMI reports. This is our scorecard.

"Solid rates of expansion were signalled by the PMIs for the US, Japan, the UK, Russia, Switzerland and Mexico. Meanwhile, the downturn in the eurozone continued to ease," noted Markit and JP Morgan. "China, Taiwan, South Korea and Vietnam also reported contractions during the latest survey period."

The global aggregate manufacturing PMI index was unchanged at 50.6 in June.

"Job losses were reported in the global manufacturing sector for the first time in seven months during June, although the rate of reduction was only slight," added Markit and JPM. "Staffing levels were lowered in China (joint-fastest reduction in over four years), Brazil, Vietnam, Switzerland and Poland, and were broadly unchanged in the US, the UK and South Korea. One of the brighter spots was Japan, where employment rose at the quickest pace since May last year."

This may be the most closely watched round of PMI reports in a long time as global economic growth hangs in the balance.

Last month, we learned that manufacturing activity was just above stagnation. The chart on the right from Markit summarizes all of the May and April PMI reports.

In recent weeks, volatility has returned to the the global financial markets as the Federal Reserve has signaled it could soon taper its stimulative bond-buying program. But any action would be conditioned on ongoing improvement in the U.S. economic data.

Abroad, China's massive economy has shown signs of slowing as credit conditions have become tighter.

Meanwhile in Western Europe, the economies continue to be deeply troubled. However, they are also showing signs of improvement.

PMI

At the beginning of each month, Markit, HSBC, RBC, JP Morgan, and several other major data gathering institutions publish the latest local readings of the manufacturing purchasing managers index (PMI) for countries around the world.

PMI is one of the best leading indicators of the economy.

Each reading is based on surveys of hundreds of companies. Read more about it at Markit.

These are not the most closely followed data points. However, the power of the insights is unparalleled. Jim O'Neill, the former Goldman Sachs economist, believes the PMI numbers are among the most reliable economic indicators in the world. BlackRock's Russ Koesterich thinks it's one of the most underrated indicators.

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June 28 (All Times ET)

  • 7:15 p.m. Japan: Markit/JMMA Manufacturing PMI — 52.3, up from 51.5 in May

June 30, July 1

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